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Bloom Energy demonstrates 4 MW solid oxide electrolyzer

According to the company, the high-temperature, high-efficiency unit produces 20-25% more hydrogen per MW than commercially demonstrated lower temperature electrolyzers.

Bloom Energy has begun generating hydrogen from the world’s largest solid oxide electrolyzer installation at NASA’s Ames Research Center, the historic Moffett Field research facility in Mountain View, Calif, according to a news release.

This high-temperature, high-efficiency unit produces 20-25% more hydrogen per megawatt (MW) than commercially demonstrated lower temperature electrolyzers such as proton electrolyte membrane (PEM) or alkaline.

This electrolyzer demonstration showcases the maturity, efficiency and commercial readiness of Bloom’s solid oxide technology for large-scale, clean hydrogen production. The 4 MW Bloom Electrolyzer™, delivering the equivalent of over 2.4 metric tonnes per day of hydrogen output, was built, installed and operationalized in a span of two months to demonstrate the speed and ease of deployment.

“This demonstration is a major milestone for reaching net-zero goals,” said KR Sridhar, Ph.D., Founder, Chairman and CEO of Bloom Energy. “Hydrogen will be essential for storing intermittent and curtailed energy and for decarbonizing industrial energy use. Commercially viable electrolyzers are the key to unlocking the energy storage puzzle, and solid oxide electrolyzers offer inherently superior technology and economic advantages. Bloom Energy, as the global leader in solid oxide technology, is proud to share this exciting demonstration with the world: our product is ready for prime time.”

The current demonstration expands on Bloom’s recent project on a 100 kW system located at the Department of Energy’s Idaho National Laboratory (INL) which achieved record-breaking electrolyzer efficiency. In the ongoing project, 4500 hours of full load operations have been completed with a Bloom Electrolyzer™ producing hydrogen more efficiently than any other process – over 25% more efficiently than low-temperature electrolysis.

The INL steam and load simulations replicated nuclear power conditions to validate full capability of technology application at nuclear facilities, and the pilot results revealed the Bloom Electrolyzer producing hydrogen at 37.7 kWh per kg of hydrogen. Dynamic testing conducted at INL included ramping down the system from 100 percent of rated power to 5 percent in less than 10 minutes without adverse system impacts. Even at 5 percent of rated load, the energy efficiency (kWh/kg) was as good or better than other electrolyzer technologies at their 100% rated capacity. These results will be presented at the Department of Energy’s Annual Review Meeting in Washington DC on June 7, 2023.

“The amount of electricity needed by the electrolyzer to make hydrogen will be the most dominant factor in determining hydrogen production cost. For this reason, the efficiency of the electrolyzer, the electricity needed to produce a kilogram of hydrogen becomes the most critical figure of merit. This 4 MW demonstration at the NASA Ames Research Center proves that the energy efficiency of our large-scale electrolyzer is similar to the small-scale system tested at INL highlighting the strength of our modular architecture,” said Dr. Ravi Prasher, Chief Technology Officer of Bloom Energy. “The electrolyzer product is leveraging the Bloom platform knowhow of more than 1 GW of solid oxide fuel cells deployed in the field and providing approximately 1 trillion cumulative cell operating hours. The same technology platform that can convert natural gas and hydrogen to electricity can be used reversibly to convert electricity to hydrogen. With Bloom’s high-efficiency, high-temperature solid oxide electrolyzers, we are one step closer to a decarbonized future powered by low-cost clean hydrogen.”

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European Union gives 213m to Faurecia for clean mobility

Faurecia will develop lightweight carbon fiber gaseous hydrogen tanks as well as a tank to store hydrogen in cryogenic form.

Faurecia, a subsidiary of the French FORVIA Group, will receive EUR 213m from to develop lightweight carbon fiber gaseous hydrogen tanks as well as a tank to store hydrogen in cryogenic form, according to a news release.

The money is dedicated to Faurecia’s Historhy Next project. Faurecia’s plant in Allenjoie will produce over 100.000 tanks per year, start of production will be in 2024.

In addition, fuel cell supplier Symbio, a joint venture between Faurecia and Michelin, is also among the 10 projects supported by the French government in IPCEI (Important Project of Common European Interest), which has dedicated EUR 2.1bn to support the hydrogen industry in France.

A large-scale transformation project, Hymotive will accelerate the mass production of its latest-generation fuel cell systems in Saint-Fons.

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Energy Vault appoints United Airlines executive to board

The appointee, Theresa Fariello, has served as senior vice president of Government Affairs & Global Public Policy for United Airlines since 2017.

Energy Vault Holdings, a provider of sustainable grid-scale energy storage solutions, has appointed Theresa Fariello to the company’s Board of Directors effective February 1.

She replaces Henry Elkus, founder and CEO of Helena, a strategic partner and Series B-1 investor in Energy Vault, upon his concurrent departure from the Board.

Fariello has served as senior vice president of Government Affairs & Global Public Policy for United Airlines since 2017. In this role, she leads United Airlines’s federal, state, local, and international government engagement, including environmental affairs. Prior to her role at United Airlines, Fariello served a 16-year tenure at ExxonMobil, where she advised executive leadership on key governmental and policy matters. Prior to her time at ExxonMobil, Fariello served as deputy assistant secretary for International Energy Policy in the Office of International Affairs at the US Department of Energy and held senior leadership positions at Occidental Petroleum Corporation.

“We are honored to welcome Theresa, who brings extensive and valuable experience in government affairs and public policy at leading public companies to Energy Vault’s Board of Directors,” said Robert Piconi, chairman and chief executive officer, Energy Vault. “The recent passage of the IRA is one example of a significant accelerator for our industry and our customers in the United States. Theresa’s leadership and experience will help us fully leverage the opportunities associated with this landmark legislation while strategically optimizing our global approach to working with government organizations in an increasingly complex regulatory and public sector environment. I look forward to working with her as we execute our global growth plans.”

“It is a distinct privilege to join Energy Vault’s Board of Directors,” said Theresa Fariello. “I am inspired by Energy Vault’s mission and commitment to creating a cleaner, more sustainable future. As the need to address and combat climate change becomes ever more urgent, so too does the need to shape environmental and climate policy to accelerate the deployment of innovative solutions, such as Energy Vault’s energy storage technologies. I welcome the opportunity to work alongside the rest of my fellow board members, and I look forward to lending my voice and experience to the company as it continues to grow.”

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Quinbrook Infrastructure moves into renewable fuels

Quinbrook has acquired renewable fuels and biogas company PurposeEnergy.

Quinbrook Infrastructure Partners, a specialist investment manager focused exclusively on the infrastructure needed to drive the energy transition, has acquired PurposeEnergy, according to a news release.

An established US-based renewable fuels and biogas specialist, PurposeEnergy is focused on waste solutions for the food and beverage industries. Over the last 15 years, PurposeEnergy has developed, owned and operated multiple projects that convert organic waste streams to biogas for use in industrial processes, conversion to renewable electricity, or refinement to Renewable Natural Gas (“RNG”).

“Quinbrook is really excited to be moving into such a high growth and important sector that desperately needs more sustainable solutions that convert organic food waste into renewable power and biogas. The demand for renewable fuels is exploding and in PurposeEnergy we have found a highly capable technical and operational team that have been in business over a decade, delivering impactful solutions for customers and the environment,” said Quinbrook’s Managing Partner and Co-Founder David Scaysbrook. “Now is the right time for us to scale this business to realise its full potential. PurposeEnergy is a great example of the Quinbrook model for value-add investing.”

Headquartered in New Hampshire, PurposeEnergy utilizes proven technologies including proprietary methods developed and patented by the company to convert organic waste streams to high value biogas and RNG that is sold to customers under long term contracts. The Company has established an impressive track record developing, designing, constructing and operating projects that have delivered high impact solutions for the food and beverage industry. In many cases, this has enabled customers to materially increase production and improve the economics of their core business.

PurposeEnergy has developed, designed and built seven projects that support the ESG, business and decarbonization objectives of some of the largest food and beverage companies in the world. The Company currently has one project in construction, two starting construction later this year and additional growth projected from existing and new customers. While PurposeEnergy has largely served the food and beverage industries, the Company also works with dairies and depacking operations to convert organic waste streams to energy.

“For more than a decade, PurposeEnergy has demonstrated technical and operational excellence in treating process wastewater and organic residuals for industrial food and beverage producers. The investment by Quinbrook will greatly expand our ability to identify, finance, build and operate new projects, helping our customers achieve their ESG goals while conserving capital to invest in their core businesses,” commented PruposeEnergy Founder & CEO Eric Fitch.

Quinbrook’s acquisition of the Company will deliver the capital resources, enhanced commitment to sustainability and ESG driven impact, and additional strategic relationships to support rapid scale up to meet the growing demand for renewable fuels. The food industry is an attractive sector for investment which is set for enormous growth given more stringent environmental regulations, the critical need for more sustainable solutions for growing food waste and the acute demand for renewable fuels across the board.

Commenting on an example of how PurposeEnergy delivers solutions for its customer partners, Agri-Mark Family Dairy Farm’s Vice President of Strategic Engagement & Sustainability, Jed Davis remarked, “The construction of the Middlebury Resource Recovery Center (MRRC) adjacent to Agri-Mark/Cabot’s flagship cheddar cheese and whey protein plant represents a critical step toward achieving our operational and sustainability goals. PurposeEnergy’s project allows us to send byproducts of cheesemaking to the digester via pipeline, creating renewable energy. This direct diversion eliminates the trucking of over 250 loads per month, reducing greenhouse gas emissions by more than 2,000 tons a year. Agri-Mark’s family farm owners are committed to protecting the local environment and maintaining a resilient dairy industry for future generations. By repurposing process organics into renewable electricity for Vermont residents, Cabot is providing award-winning dairy products while supporting commitments to our local communities.”

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Feature: Is the U.S. Midwest still navigable terrain for CO2 pipelines?

Strained efforts to build thousands of miles of carbon dioxide pipelines in the U.S. Midwest could carry major implications for future projects – and for the region’s nascent clean fuels industry. According to one industry CEO, “Ethanol plants are sitting on a gold mine.”

“We’re just not interested.” 

That’s the sentiment that echoes through the testimonies of many landowners at an Iowa Utilities Board public hearing on November 7. The hearing is about Summit Carbon Solutions’ project to build a CO2 pipeline across five states, and the view is summarized in the words of Sue Carter, who owns a farm in the pipeline’s proposed path.

“We feel that it’s not a good idea to sequester the CO2, we feel that it would be detrimental to our farmland, to Iowa, and that we’re just not interested.” 

Summit Carbon Solutions, a private company backed by investors such as TPG Rise Climate, Tiger Infrastructure Partners, and John Deere, is planning to build around 2,000 miles of pipeline to transport CO2 captured at 34 ethanol and sustainable aviation fuel plants to geologic sequestration sites in North Dakota. The proposed network spans across Nebraska, North Dakota, South Dakota, Iowa, and Minnesota. 

The project, which would build one of the largest CO2 pipelines in the world, promises to capture and store up to 18 million tons of CO2 per year, offering the Midwest’s ethanol industry a path to net zero. 

But building is far from easy. 

In September, public service commissions in both North and South Dakota denied key permits to build the pipeline across those states. In Iowa, Summit is encountering staunch opposition from some landowners, who are worried about issues like safety and land preservation, and it is requesting the right of eminent domain over approximately 900 parcels of land. 

Commercial operations, which were initially expected for 2024, have been pushed back to 2026, and the project cost has risen from $4.5bn to around $5.5bn. 

In a country that, according to some estimates, needs to expand its carbon pipeline network more than ten times in 30 years to reach the ambitious goal of net zero emissions by 2050, Summit’s struggle to advance its Midwest project is emblematic of what might soon happen elsewhere. Navigator CO2 Ventures, for instance, has recently canceled a pipeline project in the area after encountering similar problems. 

And the uncertainty around pipeline development might hinder the region’s nascent clean fuels industry, which relies heavily on ethanol production and carbon capture technologies. 

*

Courtesy of Summit Carbon Solutions.

A potential cost increase was something that Summit took into consideration from the start, “whether that was because of factors related to inflation, supply chain shortages, or a longer-than-expected regulatory process,” according to Sabrina Ahmed Zenor, director of stakeholder engagement and corporate communications at Summit. He pointed out that Summit also increased the project’s expected capacity from 12 million to 18 million tons of CO2 since it was first announced. 

Regardless, the way Summit goes about securing success for its project and the extra costs and delays it faces are bound to set an example for developers across the country. 

“We need to see one or many of these projects be successful to develop a model as to how to deploy them,” said Matt Fry, senior policy manager at the Great Plains Institute, a non-profit organization dedicated to supporting carbon management technologies to achieve climate objectives. “We already have some infrastructure to transport CO2, but we just haven’t seen 1,000 to 2,000 miles transporting 10 plus million tons of CO2 a year yet.”

Already, Navigator has canceled its 1,300-mile Heartland Greenway pipeline, which was supposed to carry CO2 across Illinois, Iowa, Minnesota, Nebraska, and South Dakota. The company announced the decision on October 20, citing “the unpredictable nature of the regulatory and government processes involved, particularly in South Dakota and Iowa.”

Permitting regulations regarding carbon pipelines change from state to state. 

“Some states have deadlines or timelines associated with when an application is submitted to when a decision must be granted, which provides certainty. Some places not so much,” said Elizabeth Burns-Thompson, vice president of government and public affairs at Navigator. “Ultimately, the board did not see a pathway forward that was commercially viable.” 

According to Burns-Thompson, Summit’s challenges contributed to the decision as well. Navigator will now focus on a sequestration site in Illinois.  

Asked about Navigator’s cancellation, Summit said it “welcomes and is well positioned to add additional plants and communities to our project footprint.”

On a smaller scale, Wolf Carbon Solutions is also planning a 280-mile CO2 pipeline in Iowa and Illinois, where it filed permit applications in February and June respectively. And in May 2022 Tallgrass Energy announced its intention to convert 392 miles of natural gas pipeline into a CO2 pipeline connecting Nebraska, Colorado, and Wyoming.

*

Pipelines have been carrying CO2 in the U.S. for over 50 years, with the first large-scale carrier built in the 1970s. At the moment, there are around 5,000 miles of active CO2 pipelines in the U.S., mostly carrying the gas to oilfields, where it’s used for enhanced oil recovery. For comparison, the country has around two million miles of natural gas distribution mains and pipelines. 

“There’s a very high likelihood, almost a certainty, that if the US is to reach net zero by 2050, it’s going to need many hundreds of millions of tons of CCS, maybe a billion,” said Chris Greig a senior research scientist at Princeton University, and one of the lead authors of Net Zero America, a study that presents various pathways for the U.S. to achieve the net-zero emissions goal. 

If we capture carbon, we also need to transport it. According to the Net Zero America report, the U.S. would need to develop over 60,000 miles of new CO2 pipelines over the next 30 years, which would come at a capital cost ranging from $170 billion to $230 billion, depending on the overall reliance on carbon capture. 

*

The United States is the largest producer of ethanol in the world, and it mostly produces it in the Midwest, with Iowa leading the charge. 

Ethanol can be used to make sustainable aviation fuel, and its fermentation process emits a CO2 that is almost pure, making it a very good candidate for carbon capture. The CO2 captured at ethanol plants, in turn, can be used to produce clean fuels such as e-fuels, sustainable aviation fuel, or green methanol. 

That means the Midwest is well situated to become a major clean fuel hub, but some say that depends on the successful development of pipelines that can move CO2 at scale.  

Pipelines are not the only way to move CO2, which can be trucked or shipped. But Summit’s project is expected to transport around 18 million tons of carbon dioxide annually, and that would require an army of railcars and trucks, and cost much more. 

Navigator, whose canceled project was supposed to have the capacity to transport 10 million tonnes of CO2 per year, expandable to 15 million tonnes in the future, estimated that it would have had to employ nearly half a million trucks to move the same amount. 

Biofuel maker Gevo has recently vented the possibility of relocating its $1bn Lake Preston Net-Zero-1 sustainable aviation fuel plant if the Summit pipeline doesn’t go through. The Lake Preston project is anticipated to start operations in South Dakota in 2025 

“Failure for the Summit pipeline to be built in South Dakota puts our Lake Preston project at severe risk of being relocated to a more advantageous location that has the availability of CCS,” said Kent Hartwig, Gevo’s director of state and local affairs, at a Brown County, South Dakota, commission meeting on October 3. 

Because of the cancellation of Navigator’s pipeline, a memorandum of understanding between Infinium and Navigator to produce e-fuels was scrapped. Navigator was supposed to provide Infinium with 600,000 tons of CO2 per year for use as feedstock for e-fuels, an amount of CO2 that would require multiple ethanol emission sources tied together to be delivered. Infinium did not respond to a request for comment. 

An alternative could be to produce the fuels in the same place where the CO2 is captured. That’s the business model of CapCO2 Solutions, a company that develops green methanol-producing technology that fits in a shipping crate. 

“Ethanol plants are sitting on a gold mine,” said Jeffrey Bonar, CapCO2’s CEO. And that’s regardless of whether large CO2 pipelines get built. 

CapCO2 is currently raising money to place its first shipping crate at an ethanol plant in Illinois. Eight to ten shipping crates would be able to process all the carbon captured at an average ethanol plant, making green methanol as a result.

According to experts, though, the scale of carbon capture that pipelines can provide is still needed. 

“While it is possible to produce synthetic fuels with CO2, the current scale of these production activities and the markets are not yet able to utilize millions of tons of CO2 per year, so associated CO2 storage would be necessary,” said Fry at the Great Plains Institute. “If we are, as a nation, serious about meeting climate objectives, we’re going to have to figure out how to make this work.”

*

Summit says it has secured voluntary easements for 75%, or around 1,300 miles of the pipeline’s route, and it’s still working to secure rights over all the land it needs. More landowners “are signing every day,” according to Ahmed Zenor, of Summit.

In 2020, a pipeline carrying both CO2 and hydrogen sulfide ruptured in Satartia, Mississippi, sending 45 people to the hospital. The episode was the first major accident involving a CO2 pipeline in at least 20 years — according to the Pipeline and Hazardous Materials Safety Administration’s data, there have been 105 incidents since 2003, and no fatalities — and it spurred an ongoing update of PHMSA safety regulations. 

Among the landowners who don’t want to give Summit access to their land, the incident exemplifies their safety concerns. 

“Pipelines such as the one Summit Carbon Solutions has proposed are highly regulated to ensure public safety,” said Ahmed Zenor in an emailed statement. “In addition to being regulated by the PHMSA, the project is also subject to federal environmental regulations and state oversight.” 

Transporting materials via pipeline, she added, is safer than transporting them via truck or rail. 

The safety concerns mix with a list of worries, including construction spoiling the land, potential leaks contaminating water sources, misuse of public money, and what some landowners describe as generally aggressive behavior from Summit’s agents trying to convince them to sign voluntary easements.  

“They went to nursing homes with donuts to try to convince vulnerable senior landowners,” said Jess Mazour, program coordinator of the Iowa Chapter of the Sierra Club, an environmental organization that’s been active in fighting the pipeline.

Overall, Summit is facing the opposition any linear infrastructure always faces — a Maine transmission line linking hydroelectric dams in Canada to the Northeast, for example, has been slowed down by permitting delays — complicated by a lack of uniform regulations. 

“Siting and construction are dealt with on a state-by-state basis for CO2 pipelines,” said Danny Broberg, associate director for the Bipartisan Policy Center’s energy program. “This is not the case for gas pipelines, for which interstate siting and construction authorities exist through FERC, the Federal Energy Regulatory Commission. One challenge at play for CO2 pipelines is that there is no federal jurisdiction for interstate siting and construction.” 

Stakeholders and legislators have started discussing how to overcome the challenge — if, for example, siting and construction for CO2 pipelines should be through FERC or not — and in May, the Biden Administration urged Congress to consider providing federal siting authority for CO2 pipelines as a priority for facilitating clean energy development. No official proposal is on the table yet. 

Despite the permitting setbacks, Summit says it believes “the regulatory process around pipeline projects works well.” 

*

Eminent domain is, to use the Great Plains Institute’s Fry words, “one of the most contentious things on the planet,” and as activists and opposing landowners have pointed out during the Iowa Utilities Board public hearing, it’s not clear it would apply to CO2 pipelines, at least in Iowa. 

“In Iowa, you can only use eminent domain if it’s a public use and convenience,” said Mazour of the Sierra Club. “And that’s one of our biggest arguments. This is not a public benefit.”

Carbon capture, according to Mazour, is extending the life of a harmful industry. “We don’t believe that ethanol is the best solution to take care of our soils and our water and our rural communities and our farmers,” she said. “And then if we have healthy soils and if we treat the land differently and farm differently, we can actually sequester a lot of carbon in our ground.” 

A better solution, according to Mazour and the Sierra Club, would be to expand deployment of wind and solar. 

Whether Summit is entitled to use eminent domain in Iowa or not is something that will be settled once the Iowa Utilities Board issues its final decision — the public hearing wrapped up on November 8, and there is no deadline they have to meet. 

Additionally, Summit has to refile a permit application in South Dakota, and still gain all the necessary permits in North Dakota, Nebraska, and Minnesota. 

The debate over eminent domain ties to a more general discussion over the benefits and effectiveness of carbon capture technology. Recently, a Bloomberg investigation found that last year Occidental sold its Century carbon capture facility for way less than it spent building it, after the plant never reached its full capacity in over ten years. The Petra Nova carbon capture facility in Texas has also struggled to meet capacity and financial objectives, and it just recently came back online after suspending operations for over two years. 

“Innovation includes risks and some tolerance for failure,” said Broberg at the Bipartisan Policy Center. “It’s going to take the entire toolkit of resources to meet net zero, both from the government and the private sector.” 

*

As the Midwest becomes an incubator for plans and strategies to build CO2 pipelines, and conversations are starting over how to make regulations more uniform, developers are probably going to take a few lessons from Summit and Navigator. 

The most important of these, according to experts, is how to better engage with communities and spearhead education about carbon capture technologies. 

“Everyone’s in a rush to take advantage of subsidies through the IRA,” said  Greig at Princeton University. “But you can’t rush communities, right? I’m not convinced that all the developers have the level of sensitive, forward-looking stakeholder engagement and community engagement and discussion that is going to be necessary.” 

If government entities are serious about developing carbon capture technologies, however, it can’t just be private companies explaining why we need them, according to Navigator’s Burns-Thompson. “It needs to come from the trusted voice of the regulators themselves. And that’s not just state entities. That’s our federal entities as well.”

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Waste-to-energy specialist executes MoU with Nikola

The partnership will encourage the adoption of Nikola Class 8 zero-emission vehicles with Klean Industries’ partners and feedstock suppliers. Nikola will evaluate offtake opportunities from the company’s green hydrogen projects.

Klean Industries, a Vancouver-based waste-to-value technology provider, has executed an MOU with Nikola Corporation to encourage the adoption of Nikola Class 8 zero-emission vehicles with Klean’s partners and feedstock suppliers.

The two companies will also work on developing green hydrogen supply and dispensing infrastructure in the US and Canada, according to a statement seen by ReSource.

Nikola will evaluate offtake opportunities from green hydrogen projects being developed by Klean and its partners involving hydroelectric, wind and solar power in the Pacific Northwest and Canada. Using Klean’s green hydrogen, the companies will convert Klean’s logistics partners’ truck fleet to Nikola Class 8 zero-emission vehicles.

Both Klean and Nikola see a significant opportunity to collaborate on projects where Klean and its partners operate recycling, resource recovery, and waste-to-energy plants, the statement reads.

“We believe Nikola’s hydrogen-electric trucks are going to fundamentally change the ground transportation and logistics landscape. This exciting collaboration will create opportunities that will reinforce the importance of working together as we look to both deploy and develop a renewable hydrogen value chain,” said Jesse Klinkhamer, CEO of Klean Industries Inc., in a statement. “Developing clean energy projects with leading technology companies such as Nikola supports Klean’s strategic focus and enables our respective companies to create a symbiosis between waste, resources, and energy, while simultaneously helping in the creation of a circular low carbon economy. Green hydrogen has the potential to completely transform the energy landscape and drive a cleaner, more sustainable future.”

Klinkhamer said in an interview last year that Klean was in the process of hiring an advisor to raise between $250m – $500m in a strategic capital raise.

Carey Mendes, president, energy at Nikola said, “Klean’s vision of utilizing a green hydrogen fleet of trucks in their tire recycling ecosystem is a clear indication of the company’s commitment to creating a better, more sustainable future. Klean has already brought together like-minded partners to decarbonize their truck fleets which is a testament to their far-reaching commitment and deep knowledge of this sustainability space.”

Klean recently partnered with City Circle Group to build a fully integrated, continuous tire pyrolysis plant to recover carbon black and biofuel in Melbourne Australia. The company also signed a partnership agreement with H2 Core Systems to distribute and build green hydrogen projects around the globe.

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Feature: Why blue hydrogen developers are on the hunt for livestock-based RNG

The negative carbon intensity ascribed to livestock-derived renewable natural gas could allow blue hydrogen production to meet the threshold to qualify for the full $3 per kg of hydrogen tax credit under section 45V. The viability of this pathway, however, will depend on how hydrogen from biogas is treated under the IRS’s final rules.

Lake Charles Methanol, a proposed $3.24bn blue methanol plant in Lake Charles, Louisiana, will use natural gas-based autothermal reforming technology to produce hydrogen and carbon monoxide, which will then be used to produce 3.6 million tons per year of methanol while capturing and sequestering 1 million tons per year of carbon dioxide.

And if certain conditions are met in final rules for 45V tax credits, the developer could apply for the full benefit of $3 per kg of hydrogen produced. How? It plans to blend carbon-negative renewable natural gas into its feedstock.

“Lake Charles Methanol will be a large consumer of RNG to mitigate the carbon intensity of its hydrogen production,” the firm’s CEO, Donald Maley, said in written comments in response to the IRS’s rulemaking process for 45V.

The issue of blending fractional amounts of RNG into the blue hydrogen production process has emerged as another touchstone issue before the IRS as it contemplates how to regulate and incentivize clean hydrogen production.

The IRS’s proposed regulations do not provide guidance on the use of RNG from dairy farms in hydrogen production pathways such as SMR and ATR, gasification, or chemical looping, but instead only define clean hydrogen by the amount of carbon emissions.

In theory, a blue hydrogen producer using CCUS could blend in a small amount – around 5% – of carbon-negative RNG and achieve a carbon intensity under the required .45 kg CO2e / kg of hydrogen to qualify for the full $3 per kg incentive under 45V. 

This pathway, however, will depend on final rules for biogas within 45V, such as which biogas sources are allowed, potential rules on RNG additionality, incentive stacking, and the appropriate carbon intensity counterfactuals. 

Furthermore, a potentially separate rulemaking and comment period for the treatment of biogas may be required, since no rules were actually proposed for RNG in 45V on which the industry can comment.

Like the treatment of electricity within 45V, there appears to be some disagreement within Treasury about the role of RNG in the hydrogen production process, with some in the Democratic administration perhaps responding to the view of some progressives that RNG is a greenwash-enabling “sop” to the oil and gas industry, said Ben Nelson, chief operating officer at Cresta Fund Management, a Dallas-based private equity firm.

Cresta has investments in two renewable natural gas portfolio companies, LF Bioenergy and San Joaquin Renewables, and expects RNG used in hydrogen to be a major demand pull if the 45V rules are crafted correctly.

A major issue for the current administration, according to Nelson, is the potentially highly negative carbon intensity score of RNG produced from otherwise vented methane at dairy farms. The methane venting counterfactual, as opposed to a landfill gas counterfactual, where methane emissions are combusted as flared natural gas (therefore producing fewer GHG emissions than vented methane), leads to a negative CI score in existing LCFS programs, which, if translated to 45V, could provide a huge incentive for hydrogen production from RNG. 

“Treasury may be struggling with the ramifications of making vented methane the counterfactual,” Nelson said.

Divided views

The potential for this blending pathway has divided commenters in the 45V rulemaking process, with the Coalition for Renewable Natural Gas and similar companies calling for additional pathways for RNG to hydrogen, the promulgation of the existing mass balance and verification systems – as used in LCFS programs – for clean fuels, and the allowance of RNG credit stacking across federal, state, and local incentive programs.

Meanwhile, opponents of RNG blending noted that it would give an unfair economic advantage to blue hydrogen projects and potentially increase methane emissions by creating perverse incentives for dairy farmers to change practices to take advantage of the tax credits.

For example, in its comments, Fidelis New Energy speaks out forcefully against the practice, calling it “splash blending” and claiming it could cost Americans $65bn annually in federal incentives “with negligible real methane emission reductions while potentially driving an increase in emissions overall without proper safeguards.”

Fidelis goes on to state that allowing RNG to qualify under 45V results in a “staggering” $510 / MMBtu for RNG, a “market distorting value and windfall for a select few sizable industry participants.”

Renewables developer Intersect Power similarly notes the potential windfall for this type of project, since the $3 credit would be higher than input costs for blue hydrogen. “Said another way, hydrogen producers using natural gas and blending RNG with negative CI will be extremely profitable, such that it would encourage the creation of more sources of RNG to capture more credits,” according to the comments, which is signed by Michael Wheeler, vice president, government affairs at Intersect.

Stacking incentives

In its initial suggestions from December, Treasury introduced the possibility of limiting RNG that qualifies under 45V from receiving environmental benefits from other federal, state, or local programs, such as the EPA’s renewable fuel standard (RFS) and various state low carbon fuel standards (LCFS).

In response, the Coalition for Renewable Natural Gas said that it does not “believe it is the intent of the Section 45V program to limit or preclude RNG from participation in” these programs. 

“In particular, a hydrogen facility utilizing RNG to produce clean hydrogen as defined in Section 45V program should be eligible to claim the resulting Section 45V tax credit, and not be barred or limited from participating in the federal RFS or a state LCFS program, if the RNG-derived hydrogen is being used as a transportation fuel or to make a transportation fuel (e.g. SAF, marine fuel, or other fuel) used in the contiguous U.S. and/or the applicable state (e.g., California), respectively,” the organization wrote.

Various commenters along with the Coalition for Renewable Natural Gas stated that the incentives should work together, and that the EPA has “long recognized that other federal and state programs support the RFS program by promoting production and use,” as Clean Energy Fuels wrote.

Cresta, in its comments, noted that the 45V credit would result in a tax credit of $19.87 per MMBtu of RNG, while almost all potential dairy RNG build-out has a breakeven cost above $20 per MMBtu — in other words, not enough to incentivize the required buildout on its own.

Including this incentive plus environmental credits such as LCFS and RINs could get RNG producers to higher ranges “where you’re going to get a lot of buildout” of new RNG facilities, Nelson said.

In contrast, Fidelis argues that the ongoing RNG buildout utilizing just the existing state LCFS and RFS credits is proof enough that the incentives are working, and that 45V would add an exorbitant and perverse incentive for RNG production.

“To demonstrate the billions in annual cost to the American taxpayer that unconstrained blended RNG/natural gas hydrogen pathways could generate in 45V credits, it is important to consider the current incentive structure and RNG value today with CA LCFS and the EPA’s RFS program, as well as with the upcoming 45Z credit,” Fidelis writes. “Today, manure-RNG sold as CNG with a CI of -271.6 g CO2e / MJ would generate approximately $70 / MMBtu considering the value of the natural gas, CA LCFS, and RFS. The environmental incentives (LCFS and RFS) are 23x times as valuable as the underlying natural gas product.”

In its model, Fidelis claims that the 45V credit would balloon to $510 / MMBtu of value generation for animal waste-derived RNG, but does precisely explain how it arrives at this number. Representatives of Fidelis did not respond to requests for comment.

RNG pathways

As it stands, the 45VH2-GREET 2023 model only includes the landfill gas pathway for RNG, thus the Coalition for Renewable Natural Gas and other RNG firms propose to add biogas from anaerobic digestion of animal waste, wastewater sludge, and municipal solid waste, as well as RNG-to-hydrogen via electrolysis.

According to the USDA, “only 7% of dairy farms with more than one thousand cows are currently capturing RNG, representing enormous potential for additional methane capture,” the coalition said in its comments.

Even the Environmental Defense Fund, an environmental group, supports allowing biomethane from livestock farms to be an eligible pathway under 45V, “subject to strong climate protections” such as monitoring of net methane leakage to be factored into CI scores and the reduction of ammonia losses, among other practices.

However, the EDF argues against allowing carbon-negative offsets of biomethane, saying that “doing so could inappropriately permit hydrogen producers to earn generous tax credits through 45V for producing hydrogen with heavily polluting fossil natural gas.”

First productive use

In issuing the 45V draft guidance in December, the Treasury Department and the IRS said they anticipated that in order for RNG to qualify for the incentive, “the RNG used during the hydrogen production process must originate from the first productive use of the relevant methane,” which the RNG industry has equated with additionality for renewables under 45V.

The agencies said that they would propose to define “first productive use” of the relevant methane “as the time when a producer of that gas first begins using or selling it for productive use in the same taxable year as (or after) the relevant hydrogen production facility was placed in service,” with the implication being that  “biogas from any source that had been productively used in a taxable year prior to taxable year in which the relevant hydrogen production facility was placed in service would not receive an emission value consistent with biogas-based RNG but would instead receive a value consistent with natural gas.”

This proposal is opposed by the RNG industry and others planning to use it as a feedstock.

“Instituting a requirement that the use of RNG for hydrogen production be the ‘first productive use’ of the relevant methane would severely limit the pool of eligible projects for the Section 45V PTC,” NextEra Energy Resources said in its comments.

Nelson, of Cresta, called the “first productive use” concept for RNG “a solution in search of a problem,” noting that it’s more onerous than the three-year lookback period for additionality in renewables.

“Induced emissions are a real risk in electricity – they are a purely hypothetical risk in RNG,” Nelson said, “and will remain a hypothetical risk indefinitely in virtually any scenario you can envision for RNG buildout, because there’s just not that many waste sites and sources out there.”

The issue, Nelson added, is that if RNG facilities are required to align their startup date with hydrogen production, the farms where RNG is produced would just continue to vent methane until they can coincide their first productive use with hydrogen.

The Coalition for Renewable Natural Gas argues that the provision “would cause a significant value discrepancy for new RNG projects creating a market distortion, greater risk of stranded RNG for existing projects, added complexity, and higher prices for end-consumers.”

The Coalition proposes, instead, that Treasury could accept projects built prior to 2030 as meeting incrementality requirements “with a check in 2029 on the market impacts of increased hydrogen production to determine, using real world data, if any such ‘resource shifting’ patterns can be discerned.”

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